Before you leave the military, take a good look at your current and future financial situation. If you’ve never done this before, I can offer some practical suggestions for getting started. You may want to begin by learning the basics about financial statements, the different types and what each tells you.

Begin with a simple Income and Expense breakdown. List all of your current income sources and their monthly amounts. Then list all of your monthly expenses. If you’ve never done this and would like help, contact the Fleet and Family Support Center or your Command Financial Counselor. They have pre-printed forms and can help you fill them out.

Next, project what your Income and Expenses will be after you leave the service. For a retirement pay projection, there are several online sites that offer this service. Do you have any debts that could be paid off before you leave the service? How might you simplify your lifestyle to lower expenses? Remember to include your new State and Federal tax bills.

One of the most frequently asked questions by people leaving the military is, “How do I calculate the equivalent civilian salary to my military salary?” Or “How much income do I need to maintain my current lifestyle?” A broad estimate would be to increase your gross military pay by 35%. {gross MIL salary + (gross MIL salary x 35%) = gross CIV salary}

For those of you comfortable with your Income and Expense Statement, complete your Balance Sheet listing all your assets and liabilities. I define assets as those things that generate income, and liabilities as those things that create expenses. By this definition, your home is a liability. Yes, its value may be appreciating long term but it does not generate income. It doesn’t put money in your pocket every month. Think about it…

Assets are things like bank Certificates of Deposit, rental income property, your own business, and interest earning savings. Liabilities are things like such as your mortgage, credit card balances, school loans, and car and boat loans. Is your Asset column larger than your Liabilities? How might you increase your assets? What could you buy that would generate positive cash flow every month? Are there any liabilities you can reduce?

A clear picture of your financial situation will help when you go into salary and benefits negotiations with a prospective employer. And if you plan to start your own business, your Balance Sheet may be required as part of a bank loan request package.

Which brings up an often asked question, “Will prospective employers use my military retirement retainer and benefits as bargaining chips during my civilian salary and benefits negotiations?” The answer is that they should NOT.

All the major corporate Human Resource Officers I’ve spoken with have told me they would never consider military retirement in calculating an offer. It’s clear discrimination.They don’t ask about your dividend payments from stocks or other income sources, why should they ask about your military retirement?

Your retirement is a benefit you’ve earned and is not to be used as a bargaining chip. If you’re asked about it, I suggest you say it’s not on the table for discussion. If they persist, you may want to go to another company. That one isn’t ethical.

Start the next chapter in your life on solid financial ground. Know where you are now, where you want to be in the future, and create a plan to get there. Manage your money with integrity and it won’t end up managing you!